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2d 1137
78 A.L.R.Fed. 639, 53 USLW 2618, 6
Employee Benefits Ca 1641,
18 Fed. R. Evid. Serv. 391
Appellant Keith Fulton & Sons, Inc. (Fulton) originally challenged the
constitutionality of the Multiemployer Pension Plan Amendments Act of 1980
(MPPAA), 29 U.S.C. Secs. 1381, et seq., Pub.L. No. 96-364, 94 Stat. 1208
(1980), on a number of grounds. A panel of this court upheld most of the act,
but found that certain presumptions in the statute, 29 U.S.C. Sec. 1401(a)(3),
deprived employers of procedural due process. Because of the importance of
the issue, the unanimous authority of other circuits against the panel's view,1
and the questions raised by the parties following the panel decision, we decided
to reconsider whether the prescribed method of assessing withdrawal liability,
with its statutory presumptions, is constitutional. After a careful review of the
statute, its legislative history, and the opposing arguments, we have concluded
that the statute does meet the requirements of procedural due process.
I. BACKGROUND
The facts surrounding Fulton's withdrawal from the New England Teamsters
and Trucking Industry Pension Fund (the Fund) are set out in the opinion of the
panel at 762 F.2d 1124 (1st Cir.1984). Although that opinion also describes the
history of the MPPAA and some of its provisions, we believe it necessary to
review certain aspects of that discussion as background for this decision.
"In the case of the determination of a plan's unfunded vested benefits for a plan
year, the determination is presumed correct unless a party contesting the
determination shows by a preponderance of evidence that--
(i) the actuarial assumptions and methods used in the determination were, in the
aggregate, unreasonable (taking into account the experience of the plan and
reasonable expectations), or
(ii) the plan's actuary made a significant error in applying the actuarial
assumptions or methods."
A district court reviewing the arbitrator's award must then presume the
arbitrator's findings of fact to be correct unless they are rebutted by "a clear
preponderance of the evidence." 29 U.S.C. Sec. 1401(c). Fulton contends that
these presumptions make the trustees' determinations "virtually unassailable",
and they argue that the inability to meaningfully challenge the initial
calculation is a denial of due process.
II. DISCUSSION
"10'[i]t is by now well established that legislative Acts adjusting the burdens and
benefits of economic life come to the Court with a presumption of constitutionality,
and that the burden is on one complaining of a due process violation to establish that
the legislature has acted in an arbitrary and irrational way. See, e.g., Ferguson v.
Skrupa, 372 U.S. 726 [83 S.Ct. 1028, 10 L.Ed.2d 1347] (1963); Williamson v. Lee
Optical Co., 348 U.S. 483, 487-488 [75 S.Ct. 461, 464, 99 L.Ed. 563] (1955).' "
Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15, 96 S.Ct. 2882, 2892, 49
L.Ed.2d 752 (1976).
11
satisfied, we are required to balance the private interest that will be affected, the
risk of error inherent in the challenged procedure, and the government's interest
in using the procedure, Mathews v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893,
903, 47 L.Ed.2d 18 (1976), but we also "are mindful that 'due process is
flexible and calls for such procedural protections as the particular situation
demands,' " Republic Industries v. Teamsters Joint Council, 718 F.2d 628, 640,
(quoting Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 2600, 33
L.Ed.2d 484 (1972)). Thus, our inquiry is not whether there is a fairer method
for assessing withdrawal liability, but only whether the method Congress chose
is fair enough. The statute can not be arbitrary, but it need not be perfect.
12
In a sense, Fulton takes issue with two separate aspects of the MPPAA
arbitration procedures: the use of a non-neutral party, the fund trustees, to
calculate the liability in the first instance, and the use of presumptions to
support that initial calculation. While statutory presumptions are not uncommon
and have been upheld frequently,2 the original panel in this case was concerned
about the due process implications of granting the presumptions on behalf of
apparently non-neutral trustees. Although we recognize that the trustees come
to their task of calculating withdrawal liability with a bias, we do not believe
that their lack of neutrality, even when aided with the statutory presumptions,
deprives Fulton and other employers of due process. We do not minimize the
hardship to Fulton, a sole stockholder corporation assessed a withdrawal
liability of $468,637 when it withdrew from the Fund after the City of
Cambridge acquired its land in a federally subsidized taking for a public
transportation project. We simply rule that the action Congress took was within
its discretion.
13
15
This case, therefore, is unlike Ward v. Village of Monroeville, 409 U.S. 57, 93
S.Ct. 80, 34 L.Ed.2d 267 (1972), in which the town mayor also acted as the
initial judge for certain minor violations. The Supreme Court in Ward found a
due process violation because the mayor had an obvious interest in increasing
town revenues and the "[p]etitioner [was] entitled to a neutral and detached
judge in the first instance." Id. at 61-62, 93 S.Ct. at 84. Unlike the mayor in
Ward, whose role was to adjudicate traffic offenses and impose fines on a caseby-case basis, "the trustees play a mixed role since much, but admittedly not
all, of their task is ministerial in nature," Republic Industries, 718 F.2d at 640 n.
13.
16
On this issue, then, we are in accord with the court in Dorn's Transp., Inc. v.
I.A.M. Nat. Pension Fund, 578 F.Supp. 1222, 1237-38 (D.D.C.1984):
17
18
Even if the trustees need not be as neutral as judges, their decisions must
nevertheless provide due process to the employers. Fulton believes the trustees
can not calculate liabilities in a constitutional manner because of their
institutional bias and the presumptions which reinforce their biased decisions.
We disagree for two reasons. First, we do not believe the trustees are as biased
against the employers as Fulton suggests; and, second, we believe the statutory
procedure lawfully envisions a less perfect calculation than Fulton demands.
We discuss each of these points separately below.
Trustee Bias
19
An equal number of trustees are chosen by the participating employers and the
participating unions, and so their allegiances are not uniformly against the
withdrawing employer. Although it has been argued that even employer trustees
would be inclined to inflate the withdrawal liability to lessen the burden on
employers who remain in the plan, Republic Industries, 718 F.2d at 640;
Shelter Framing, 543 F.Supp. at 1244, such an approach is unlikely since the
initial choice of a method for calculating the liability will be used on all
subsequent withdrawals from that fund, possibly including withdrawal of the
trustees' own employers. Although the trustees are fiduciaries to the fund, and
must consider the fund's interest above all else, that does not mean always
choosing the highest withdrawal liability:
20 fiduciaries are given a great deal of flexibility to strike a balance among the
"Plan
competing considerations of encouraging new entrants, discouraging withdrawals,
easing administrative burdens, and protecting the financial soundness of a fund. The
committee wishes to make it clear that in choosing the rules that would eliminate or
reduce liability, the choice of such a rule is not per se a violation of fiduciary
standards; the determination must be made as to whether the fiduciary has acted
reasonably and in the interests of plan participants and beneficiaries and otherwise in
accordance with the fiduciary standards." H.R.Rep. No. 869, 96th Cong., 2d Sess.
67, reprinted in 1980 U.S.Code Cong. & Ad.News 2935.5
21
This commentary makes it clear that the trustees' role is not simply to find the
highest value for withdrawal liability; they would not meet their fiduciary duty
to the fund, for example, if they set excessively high withdrawal liabilities
which would have the effect of discouraging future participation. Shelter
Framing, 543 F.Supp. at 1244.
22
23
Thus, we can not say that an institutional bias on the part of the trustees makes
unconstitutional the MPPAA's procedure for calculating withdrawal liability.
Fulton argued in its supplemental brief that we should find the MPPAA's
presumptions of correctness unconstitutional because "an employer simply has
no financial incentive to go to arbitration solely over the issue of actuarial
assumptions unless there is something so utterly aberrant about the case that no
person could seriously doubt that the trustee erred." Although we think Fulton
overstated the likely impact of the presumptions on employers, we also think it
is true that the presumptions discourage litigation. That, however, is precisely
their point:
25
"These rules are necessary in order to ensure the enforcability [sic] of employer
liability. In the absence of these presumptions, employers could effectively
nullify their obligation by refusing to pay and forcing the plan sponsor to prove
every element involved in making an actuarial determination." House Report at
86, U.S.Code Cong. & Admin.News 1980, p. 2954.
26
We think this factually compelled concession gives the game away. Fulton
concedes there are several "correct" methods, yet insists it is entitled to a better
"correct" method than the Fund chose. We do not think due process requires
this much. Congress apparently recognized the imprecision of forecasting a
plan's financial future, and created the presumptions to avoid "[l]engthy, futile
and costly bickering over the adequacy of the methods chosen." Dorn's, 578
F.Supp. at 1239.7 We think a convincing test of the constitutionality of this
approach is to ask if Congress could have enacted a flat requirement that would
have been even harsher on employers. We have no doubt that in furtherance of
its objective of shoring up financially troubled multiemployer pension plans,
see House Report at 54-55, reprinted in 1980 U.S.Code Cong. & Ad.News
2922-23, Congress could have unilaterally imposed the highest reasonable
withdrawal liability, since Congress need not have a perfect fit in matching
economic legislation with its purpose. Turner Elkhorn, 428 U.S. at 19, 96 S.Ct.
at 2894; Ferguson v. Skrupa, 372 U.S. 726, 730-32, 83 S.Ct. 1028, 1031-32, 10
L.Ed.2d 93 (1963); Williamson v. Lee Optical, 348 U.S. 483, 487-88, 75 S.Ct.
461, 464, 99 L.Ed. 563 (1955). If the imposition of withdrawal liability is
constitutional, and we have held that it is, 762 F.2d 1124, then Congress'
decision to impose any reasonable amount must also be constitutional. Thus,
instead of a flexible system with presumptions, Congress could have
constitutionally required the trustees or even an independent agency to use the
actuarial method which would produce the highest reasonable withdrawal
liability. A rigid system imposing the highest reasonable amount would do the
job of minimizing disputes over withdrawal liability amounts even better than
presumptions since it would avoid arguments, like Fulton's, over what amount
is "most reasonable". Since Congress could draft a statute to accomplish
precisely what it has accomplished through the presumptions, but with less
responsiveness to individual cases, "we do not think that Congress' choice of
statutory language can invalidate the enactment when its operation and effect
are clearly permissible." Turner Elkhorn, 428 U.S. at 23, 96 S.Ct. at 2896. We
think it aids a proper sense of perspective to reflect that, after all, the Supreme
Court upheld the retroactive application of the MPPAA, Pension Benefit
Guaranty Corp. v. R.A. Gray & Co., --- U.S. ----, 104 S.Ct. 2709, 81 L.Ed.2d
601. Certainly, if due process allows the retroactive imposition of this
potentially substantial liability, it must allow deference to a calculation of that
liability which even Fulton admits is likely to be reasonable, and which can be
struck down if shown to be unreasonable.
28
Our rejection of Fulton's argument does not mean that we believe Congress
picked the best method for ascertaining an employer's withdrawal liability. It is
quite likely that an expert arbitrator who would handle all disputes concerning a
specific pension fund's withdrawal liability would be "fairer" than a set of
trustees who, to one extent or another, have an interest in the calculation. See
Note, Trading Fairness for Efficiency: Constitutionality of the Dispute
Resolution Procedures of the Multiemployer Pension Plan Amendments Act of
1980, 71 Geo.L.J. 161, 190-91 (1982). Finding the best method, however, is
not our function; under the due process precedents which guide us, we must
only find that Congress acted rationally in designing the procedure for
calculating withdrawal liability.
29
30
It is also instructive to consider the impact of a decision for Fulton. Without the
presumption in favor of the trustees' determination, results in arbitration are
likely to vary for withdrawals even in the same year from a given plan,
undermining Congress' evident intent that plan rules be administered uniformly
with respect to each employer, 29 U.S.C. Sec. 1394(b). Elimination of the
presumption will also lead to an increase in litigation over the withdrawal
liability assessments, even in cases when the amount apparently is correct but
the employer hopes it can slip a marginal case for another amount past a
sympathetic arbitrator. Fulton concedes the presumptions now discourage such
wistful litigation. Congress passed this legislation to protect financially shaky
pension plans, and we would be stripping a layer of lawful protection from the
plans by removing the presumption and opening them up to an increased load
of litigation.
31
We are not without some comparisons, however, and those we have found
convince us that we have reached the correct resolution of this case. In Turner
Elkhorn, 428 U.S. 1, 96 S.Ct. 2882, the Supreme Court upheld a number of
evidentiary presumptions in the Black Lung Benefits Act of 1972, including
two irrebuttable ones, establishing coal miners' entitlement to death or disability
benefits for pneumoconiosis, or black lung disease. In finding the statute
constitutional, the Court noted that presumptions arising in civil statutes
involving matters of economic regulation do not violate due process as long as
there is a " 'rational connection between the fact proved and the ultimate fact
presumed' ", id. at 28, 96 S.Ct. at 2898, quoting Mobile, J. & K.C.R. Co. v.
Turnipseed, 219 U.S. 35, 43, 31 S.Ct. 136, 138, 55 L.Ed. 78 (1910). The Court
also stated:
"33'The process of making the determination of rationality is, by its nature, highly
empirical, and in matters not within specialized judicial competence or completely
commonplace, significant weight should be accorded the capacity of Congress to
amass the stuff of actual experience and cull conclusions from it.' " 428 U.S. at 28,
96 S.Ct. at 2898, quoting United States v. Gainey, 380 U.S. 63, 67, 85 S.Ct. 754,
757, 13 L.Ed.2d 658 (1965).
34
35
Other cases of which we take note include Vance v. Terrazas, 444 U.S. 252,
100 S.Ct. 540, 62 L.Ed.2d 461 (1980), in which the Supreme Court upheld an
evidentiary presumption that a U.S. citizen who declares allegiance to a foreign
state intended the expatriating conduct. Despite a recognized preference for
requiring clear and convincing evidence to prove expatriation, the Court upheld
the presumption because the proceeding involved was civil in nature and did
not threaten a loss of liberty. Again, while we recognize the distinction between
the presumption at issue in this case and the presumption in Vance, we contrast
the importance of the matter at issue there, an individual's citizenship, with the
economic interest at stake here.
36
The Supreme Court itself made a similar contrast when it upheld the
constitutionality of duration-of-relationship requirements for Social Security
benefit eligibility for surviving wives and stepchildren of deceased wage
earners:
37
"The Constitution does not preclude such policy choices as a price for
conducting programs for the distribution of social insurance benefits. [Citation
omitted.] Unlike criminal prosecutions, or the custody proceedings at issue in
Stanley v. Illinois [405 U.S. 645, 92 S.Ct. 1208, 31 L.Ed.2d 551 (1972) ], such
programs do not involve affirmative Government action which seriously
curtails important liberties cognizable under the Constitution. There is thus no
basis for our requiring individualized determinations when Congress can
rationally conclude not only that generalized rules are appropriate to its
purposes and concerns, but also that the difficulties of individual
determinations outweigh the marginal increments in the precise effectuation of
congressional concern which they might be expected to produce." Weinberger
v. Salfi, 422 U.S. 749, 785, 95 S.Ct. 2457, 2476, 45 L.Ed.2d 522 (1975).
38
While Salfi, too, provides an imperfect analogy with the issue of Congress'
prescribed method for computing withdrawal liability, it, like Vance, suggests
to us that the present case falls even more clearly within the bounds of due
process. Unlike Salfi, which reflected a generalized, irrebuttable presumption
that recent marriages were more likely than not shams designed specifically to
secure Social Security benefits, this case involves only a rebuttable
presumption that a calculation which probably will be within a range of
reasonableness is an appropriate withdrawal liability.
39
Although we concede that Congress may not have prescribed the fairest plan
for assessing withdrawal liability, our review of the statute in light of the
standard of due process convinces us that the provisions of 29 U.S.C. Sec.
1401(a)(3) are not constitutionally deficient. "Read together ... these provisions
do little more than allocate the burden of proof to the challenger and direct that
issues which are close be resolved in favor of the nonjudicial dispute resolver",
Republic Industries, 718 F.2d at 640-41.
40
The district court's denial of Fulton's motion for summary judgment on this
issue is affirmed.
41
42
Possibly it is pointless, and even presumptuous, to dissent, given that the court's
opinion accords with the conclusions of all other courts that have spoken on
this issue. However, with respect, I am troubled. To put plaintiff's claim baldly,
he finds himself, without possibility of relief, in a boxing ring from which he
had been told he might be exempt, the prize being his own money, in an uneven
match, but assured by the referee that he would see to it that it was a fair fight.
Although not put in exactly those terms, the justification offered for this is that
it was his own fault for associating with people like that, and his opponent
needs the money. I agree that some of plaintiff's contentions are incorrect. I do
not feel they all are.
43
44
On November 10, 1980, plaintiff's land adjoining the railroad tracks needed to
carry on its activities was taken by eminent domain. Since no other usable land
was available, plaintiff was promptly out of business. It, accordingly, ceased
contributing to the Fund. In the meantime, on September 26, 1980, Congress
had passed an amendment to ERISA, the MPPAA, which provided that all
employers withdrawing from plans after April 29, 1980 were immediately
subject to an assessment, payable in monthly installments over a period of five
years. 29 U.S.C. Secs. 1381-1405, 1461(e). Unlike the prior statutory scheme,
this assessment was not refundable under any circumstances, regardless of how
well the Fund fared. Hence plaintiff's future contingent liability, if any, in an
unknown amount, under the prior section 1363, was replaced by an absolute
liability, commencing forthwith, under the MPPAA.
45
Nor was this an assessment required only in case of voluntary withdrawal, and
hence one that could be avoided by remaining a Fund participant. While the
legislative history shows that the 1980 amendment to ERISA was sparked by
reports that employers were withdrawing from plans in such numbers as to
threaten their future solvency--as employers then had a right to do, subject to
the five year contingency assessments--so that legislation was desirable to put a
halt to such conduct, the act as passed applied to all employers alike, even if
withdrawal had been forced upon them. Although I mention this particular
hardship to plaintiff, my dissent is not based upon it, but goes simply to the
assessment procedure. Some might think, however, that it emphasizes the need
of fairness, to the extent that fairness was practicably achievable.
46
47
However, even though more burdensome in both procedure and substance than
the prior statutory scheme, I do not object insofar as the MPPAA merely filled a
49
This is not a mere appearance of bias; it is a real, indeed multiple, bias, rooted
both in the trustees' statutory duty and in their personal circumstances. The
trustees, as fiduciaries under 29 U.S.C. Sec. 1002(21)(A), are subject to the
duties imposed by 29 U.S.C. Sec. 1104:
50
"[A] fiduciary shall discharge his duties with respect to a plan solely in the
interest of the participants and beneficiaries and--
51
52
53
54
55
56
concerned. In what way are the trustees not performing an adjudicatory role? I
am at a loss to understand that statement. And why is it any the less
adjudicatory because it is subject to review? And particularly I ask this question
when it carries a presumption of correctness.
57
Nor does it seem helpful to say, "Congress simply assigned the duty to the
persons with the most information." An administrative law judge who owns
stock in a corporate employer might be the best informed as to what was going
on in the company, but would his interest in a proceeding involving that
company be acceptable because its decision could be reviewed by the NLRB
and challenged in court?
58
The court then says that the trustees do not have "unbridled discretion." The
most biased judge does not have unbridled discretion; he is bound by the
evidence and the rules of law. Even the need of uniformity, of which the court
makes much (e.g., the sentence quoted from Dorn's Transportation, Inc. v.
I.A.M. National Pension Fund, 578 F.Supp. 1222, 1238 (D.D.C.1984): "[T]he
precision of the Congressionally-prescribed standards cures the process of the
innate taint of partiality."), does not adequately cabin the trustees' discretion.
"The Congressionally-prescribed standards" certainly do not produce anything
like the precision of an automatic computer printout. It is far from it. Great
discretion resides in the trustees in calculating the amount of unfunded vested
liability, in some cases the actual value of the fund assets, and in all cases the
present value of vested accrued benefits. Indeed, the court's objection to what it
claims to be the employer's objection to the presumption of correctness (which,
standing alone apart from bias, the employer does not object to) is the wide
range of possible alternative "reasonable" liability figures that could thereafter
be pressed if there were no presumption to dampen litigation. In one breath the
court says the trustees are not really deciding anything, and in the next it says
there is so much room for disagreement that the trustees' decision must be
given the protection of a presumption of correctness. I cannot conclude that the
trustees are performing merely "ministerial" calculations, as distinguished from
quasi-judicial decision-making. See Marshall v. Jerrico, Inc., 446 U.S. 238,
243, 247, 100 S.Ct. 1610, 1613, 1615, 64 L.Ed.2d 182 (1980); Ward, ante, 409
U.S. at 62 n. 2, 93 S.Ct. at 84 n. 2.
59
The court would answer this by saying that while "the trustees ... must consider
the fund's interest above all else, that does not mean always choosing the
highest withdrawal liability...." It seems an odd principle to determine the
permissibility of manifest bias by weighing the decision-maker's conflicting
interests in the scales of justice and finding which side predominates. If there
could be such a principle, the interests favorable to the party who must pay
should outweigh those contrary, or at least there should be some balance.
Neither is be the case here. The court suggests that the employer-half of the
board's membership would hesitate to set too high a standard, since such a
standard ultimately might injure any of them who might later want to withdraw.
I cannot believe that such forethought, were it engaged in, could begin to
compete with the personal desirability of building up the fund in order to
minimize the future deficit that employer-trustees might have to meet. Nor, as
the court inferentially concedes, would the employee trustees--the other half of
the board's membership--feel any such possible ambivalence.
61
I agree it is possible that the trustees might give some thought to weighing the
desirability of building up the Fund's assets against the danger of scaring off
potential future joiners, but, again, for the trustees the latter danger would
hardly be likely to meet the immediacy of the calls in the former direction.
Indeed, increasing the solvency of the Fund would seem to make joining more
rather than less attractive. In sum, I must find the court's small list of alleged
contra interests speculative, and in no way comparable to the very real bias in
favor of over-assessments.
62
Next, and this seems both its theme and its coda, the court says, "It also must be
remembered that the trustees' determination is not, in fact, irrebuttable.... [I]f an
injustice does occur, the procedure provides for relief in arbitration or in federal
court." (ital. in orig.) To this I would add an exclamation point. What biased
decision by any body that is subject to review cannot be reversed if
unreasonable? With an antiseptic gesture the court has put an end to the whole
disease of bias, root and branch.
63
Nor is the court justified in attacking plaintiff by charging it with seeking the
"most reasonable" result. This is a totally unfair characterization of plaintiff's
objections to a decision made by a biased body that will be affirmed so long as
it is within the confines of reasonableness. Plaintiff is not asking for the best; it
is only asking for a fair shake. As we said in Marlboro v. Association of
Independent Colleges, 556 F.2d 78, 82 (1st Cir.1977), "Decision by an
impartial tribunal is an element of due process." The court's charge is but
another way of saying that lack of an impartial tribunal does not count if it does
not produce an unreasonable result.
64
Supplementing these arguments which I cannot find persuasive, the court seeks
to distinguish on the facts the cases which point out the impropriety of biased
tribunals. Thus Ward, ante, 409 U.S. 57, 93 S.Ct. at 80, where the deciding
officer, the mayor, was disqualified because he had an interest in increasing
town revenues, is found not applicable because "much [of the trustees'] task is
ministerial in nature." But, how "ministerial" is it for the trustees to select, as
here, a discount rate of 7 1/2 for determining future values, an interest rate
unheard of in my memory in a decade, while the Fund's actuary admitted the
rate could reasonably have been set at 14 1/2%? In Ward the mayor had no
direct, or personal, interest, but only the general interest of adding to the town's
assets. Here the trustees had the interest of protecting a fund to which they had
an affirmative fiduciary obligation. I add that in Ward a dissatisfied defendant
could obtain a trial de novo, without the handicap of a presumption.
65
The court does not seek to distinguish Ward as being a criminal case, but if one
did, I would ask what would one prefer to have decided by a biased decisionmaker, a traffic fine or a $468,000 assessment? This is financial life.
66
The court says, "If there is a liability, someone has to fix it," and accepts the
statutory procedure because it discourages litigation. Both are quite true. I must
concede that I cannot think of a better way of discouraging litigation than to
erect a procedure by which a potential litigant knows it faces a biased tribunal
whose decisions are backed by a presumption of correctness. This is not,
however, my conception of due process.
67
Finally, I find peculiarly specious, despite its superficial appeal, the court's
argument that any liability determination the trustees may make is acceptable
so long as it is within reason because Congress could have made that choice to
begin with. If Congress had enacted harsh standards, admittedly they would
pass, if reasonable. But in that case a majority of the legislators would have
made the selection. It is totally novel to me that possession of a discretionary
power should include the power to delegate that discretion to a body not
constituted to exercise it impartially, but has direct interests, in the particular
case, conspicuously weighted against the payor. Such a principle would seem
to have consequences far beyond this case.
68
What to do? The proper solution, accepting the general constitutionality of the
MPPAA, would be for Congress to designate an impartial decision-maker.
Textile Workers Pension v. Standard Dye & Finishing Co., 725 F.2d 843, 85455 (2d Cir.1984), cert. denied sub nom. Sibley, Lindsay & Curr Co. v. Bakery,
Confectionery & Tobacco Workers Int'l, --- U.S. ----, 104 S.Ct. 3554, 82
L.Ed.2d 856 (1984); Washington Star Co. v. Typographical Union Negotiated
Pension Plan, 729 F.2d 1502, 1511 (D.C.Cir.1984); Republic Industries, Inc. v.
Teamsters Joint Council No. 83, 718 F.2d 628, 640-41 (4th Cir.1983), cert.
denied, --- U.S. ----, 104 S.Ct. 3553, 82 L.Ed.2d 855 (1984). Cf. Peick v.
Pension Ben. Guar. Corp., 539 F.Supp. 1025, 1047-49 (N.D.Ill.1982), aff'd,
724 F.2d 1247, 1268 (7th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 3554,
82 L.Ed.2d 855 (1984) (appeals court upholds constitutionality of MPPAA
without expressly addressing the specific issues we consider here, the role of
the pension plan trustees and the presumptions supporting their actions,
although the district court did consider the trustees' role); Terson Co. v. Bakery
Drivers & Salesmen Local 194, 739 F.2d 118, 121 (3rd Cir.1984) (concluding
generally that MPPAA does not violate due process)
See, e.g., Vance v. Terrazas, 444 U.S. 252, 100 S.Ct. 540, 62 L.Ed.2d 461
(1980); Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 96 S.Ct. 2882, 49
L.Ed.2d 752 (1976); Mathews v. Lucas, 427 U.S. 495, 96 S.Ct. 2755, 49
L.Ed.2d 651 (1976); Weinberger v. Salfi, 422 U.S. 749, 95 S.Ct. 2457, 45
L.Ed.2d 522 (1975); Welch v. Helvering, 290 U.S. 111, 54 S.Ct. 8, 78 L.Ed.
212 (1933)
Calculation of this amount requires the use of actuarial assumptions about such
things as employee life expectancy and future rates of return on the plan's
assets. The MPPAA requires that plans use actuarial assumptions and methods
that "in the aggregate, are reasonable" and that "in combination, offer the
actuary's best estimate of anticipated experience under the plan...." 29 U.S.C.
Sec. 1393(a)(1). It is also worth noting that this calculation is made by an
actuary, a professional consultant to the plan, and not by the trustees
themselves. Although the trustees have the option of accepting or rejecting a
given projection, the trustees' actions with regard to the actuary's estimate can
be used in challenging the reasonableness of the withdrawal liability
calculations. In Woodward Sand Co. and Operating Engineers Pension Trust, 3
E.B.C. (BNA) (Employee Benefits Cases) (Kaufman, Arb.) 2351 (1982), the
plan trustees had rejected the actuary's recommended assumptions and the
arbitrator found the plan's substitute assumptions to be unreasonable. The
arbitrator reduced the employer's liability by more than 20% and awarded the
employer $10,000 in attorney's fees
4
It appears to us that, under 29 U.S.C. Sec. 1394(b), the same figures would be
used for all employers withdrawing in a given year. Although we assume the
precise numbers on some variables--for example, interest rates--might change
from year-to-year to reflect changing economic conditions, it also appears to us
that Sec. 1394(b) would require use of the same figures for unchanging
variables such as mortality rates. In any case, we do not believe the trustees
have any significant flexibility after the first employer withdraws from a fund
and the procedures for calculating withdrawal are chosen. Any deviation from
the original procedure to reach a result that harms the employer could well be
found unreasonable if challenged
We agree with the observation of the court in Peick v. Pension Ben. Guaranty
Corp., 539 F.Supp. at 1048 n. 48, quoting N.L.R.B. v. Amax Coal Co., 453
U.S. 322, 343, 101 S.Ct. 2789, 2801, 69 L.Ed.2d 672 (1981) (Stevens, J.,
dissenting), that "[e]mployer-appointed trustees do not violate their fiduciary
duties simply because they are sensitive to the management perspective of what
is best for the plan:
'[T]he administration of a trust fund often gives rise to questions over which
representatives of management and representatives of labor may have
legitimate differences of opinion that are entirely consistent with their fiduciary
duties.' "
The majority holding in Amax is not to the contrary.
This is not pure theory. See, e.g., Classic Coal Corp. v. U.M.W. 1950 and 1974
Pension Plans, 5 E.B.C. (BNA) (Employee Benefits Cases) 1449 (1984)
(Nagle, Arb.); Perkins Trucking Co. and Local 807 Pension Fund, 4 E.B.C.
(BNA) 1489 (1983) (O'Loughlin, Arb.)
7